In cases involving bounced cheques issued by a 'one-man' company, where the sole shareholder is also the director of the company, the Cypriot courts have usually found that person guilty as an accomplice of the company under Articles 20 and 305A(1) of the Criminal Code (Chap 154). In such cases the requisite mens rea (intent) of the director is satisfied relatively easily, merely by the fact that the cheques were signed even though the director knew that they could not be honoured due to insufficient funds.
By contrast, in cases involving large companies with their own economic advisers, accountants and finance directors, defendant directors have argued that they did not know that the cheques would be honoured at the time of signing since other people were handling the company's finances. In such cases the courts have found that there was reasonable doubt as to the knowledge of the relevant director at the material time of signing the cheques and the mens rea test thus could not be satisfied.
This notwithstanding, the Limassol District Court recently found the co-defendant director of the defendant company guilty, as an accomplice, of issuing cheques that could not be honoured due to insufficient funds.(1)
During the hearing the director stated that while he had issued the cheques on behalf of the company, he had nothing to do with the company's finances. He explained that the company was a large organisation with other directors, accountants and economic advisers, who had failed to inform him about the company's economic situation at the time the cheques were signed. The main issue that the court had to decide was whether, when signing the cheques, the director was aware that they would fail to be honoured because of insufficient funds and had thus assisted in the criminal action of the company as an accomplice.
After reviewing the evidence, the court found that the director had played an active and important role in the company's finances, as well as ongoing knowledge of its liquidity problems.
Considering English and Cypriot case law, the court clarified that the legal issue was not whether the director had wanted the particular consequences of his actions to arise. Instead, the court explained that the applicable mens rea test in this case was whether the defendant had in mind the natural result of his actions or at least was aware that the particular result was possible.
The court held that the director had signed the relevant cheques knowing that these would fail to be honoured because of insufficient funds, and that in any case the director knew that this outcome of his actions was a foreseeable possibility. It accordingly ruled that the mens rea test was satisfied in this case and found the director guilty of the criminal charges, as an accomplice, beyond reasonable doubt.
For further information on this topic please contact Matheos Antoniou at Democritos Aristidou & Co by telephone (+357 2558 5811) or email (firstname.lastname@example.org). The Democritos Aristidou & Co website can be accessed at www.aristidou.com.
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